Apartment leasing is a 6 billion dollar a year business. Approximately 40% of America's households are renters. Furthermore, 33% of all apartments turnover annually. This equates to approximately 10,000,000 new leases per year. Tenants move frequently because of job status, transfers, changes in financial, marital, and familial status, the need for more or less living space, medical and old age needs, and home purchases. Fortunately for apartment owners, this dynamic environment does not, in the short run, change the total number of renters in the market. Apartment owners, however, must find ways to attract new residents every month or risk economic losses. Apartment owners are looking for ways to increase the probability that qualified tenants will want to move into their apartments.
National, state and local markets have historically reported annual vacancy rates of between 4% and 10% in larger (over 30 units) apartment complexes. Because of this, the need to market continuously is more prevalent than ever. Maintaining a constant flow of prospective renters through the leasing office is necessary for stabilizing the occupancy of a property. Given the opportunity, apartment owners would rather pay a fee to a broker to fill a vacancy immediately, rather than wait until they are able to fill it themselves. This is especially true, given that the brokerage fee is worth, on average, only 18 days of a 1 year lease. Brokerage fees have become an acceptable alternative to vacancy and are considered both part of the marketing campaign and a line item expense in the budget. The higher occupancy level achieved with the aid of tenant brokers allows the apartment owner to raise rents at a faster rate.
Apartment complexes rely on a combination of media for their advertising, including local rental guide magazines, classified newspaper or display ads, radio, TV, and the Internet. All of these advertisers charge money up front regardless of results. The tenant broker is the only marketing source which requires no up front expense and is paid strictly for results. It is unlikely that out of town renters, which are an integral part of the larger pool of applicants required by larger properties, will find the property's local advertising. The Internet provides a solution to this problem.
Because of the scope of the Internet, the marketing strategies of apartment complexes are beginning to change. Apartment owners recognize that online rental guides on the Internet offer an inexpensive way to reach apartment shoppers. Even local Apartment Associations and Chambers of Commerce offer searchable listings on the Internet. Many such services charge a fee to properties which advertise on them.
Of greater significance is the fact that property owners and managers recognize that a homepage on the World Wide Web is an inexpensive way to directly communicate with both local and out of town apartment shoppers, and are beginning to create more informative homepages. Property owners and management companies will soon offer maintenance and service information on the Internet. Residents will be able to pay their rent, file a service request, renew their lease, give notice to terminate, and order electric or cable TV service, all over the Internet.
Properties which have their own homepage can place it on multiple search engines or aggregators to increase the number of visits to their page. Also, it is possible for the property to publish its rental information on multiple online services. One online service might offer a great "virtual tour", while another service might offer better maps or the ability to display floor plans. This redundancy of information is creating it's own marketplace and competition.
The prevailing online service business model is to have the property pay to be listed on the site and to permit potential tenants to view the information for free. The service providers charge these fees to cover their sales and marketing costs and to cover overhead. These fees, together with the incidental revenues from banner advertising, create their entire income stream.
The Internet has given the apartment search process a new dimension. Issues of location, pricing, features, amenities, services, and availability can now be considered before the tenant contacts the property. Tenants can even view virtual tours of properties online and thereby reduce the amount of time they spend physically touring. Employers and tenants realize that one or two days spent visiting apartments is often a waste of time and resources. The apartment search shouldn't be labor intensive and expensive; it should be information intensive and inexpensive.